Help! I Can't Pay My Mortgage. What Can I Do?
If you can no longer afford to pay your mortgage, contact your lender by phone and in writing to advise them of your situation. There are many programs available to struggling homeowners, since most lenders are trying to avoid owning residential real estate.
Avoid walking away from your home.
Along with food and clothing, shelter is one of life's basic needs, so keeping your primary residence should be your main concern. Recently, the media has featured reports of people abandoning their homes because the value is less than their mortgage balance. However, this can be a very costly decision if the lender decides to pursue a deficiency judgment after the property has been sold to someone else.
Keep making payments.
If your home is still affordable (meaning you can still make the payments) and is likely to remain that way, you should stay in it. Keep making timely monthly payments, which will decrease the balance (unless your mortgage is interest-only) and increase the equity. While home values are low now, over time they will rebound and eventually increase. Selling now means you lose the opportunity to build equity, and you may not get the price your home deserves. Down the road, once home values start to climb, buying another home will be more expensive and you may end up with higher mortgage payments.
Talk to your lender about your options.
If you're having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule, through refinancing or a loan modification, or you may be able to refinance Remember that lenders generally don't want to foreclose; it costs them money.
The government's Making Home Affordable program has two solution paths for struggling homeowners. The Home Affordable Refinance program gives homeowners an opportunity to refinance into more affordable monthly payments.
The Home Affordable Modification program helps homeowners modify their mortgage terms to prevent avoidable foreclosures.
To find out if you're eligible for these programs, Visit MakingHomeAffordable.gov and click on "Eligibility." It's helpful to know if your loan is owned by one of the two government mortgage programs, Freddie Mac or Fannie Mae. Ask your mortgage company if they can tell you, or check on your own, either online or by phone:
Fannie Mae: 1-800-7FANNIE
Fannie Mae Loan Lookup
Freddie Mac: 1-800-FREDDIE
Freddie Mac Loan Lookup
Don't just walk away!
While it may seem tempting to give up & move out, explore your options first. Many people have abandoned their homes because the value is less than the mortgage balance. However, this can be a very costly decision if the lender decides to pursue a deficiency judgment after the property has been sold to someone else.
InCharge can help.
InCharge Debt Solutions, a non-profit organization, offers a variety of debt resolution options, including housing counseling to homeowners in financial crisis. If you're ready to give up on your mortgage struggle, call us to see what options you may have or visit our housing counseling page.